Miami U.S. Rep. Carlos Curbelo supports imposing a two-percent tax on sales of agricultural products to Cuba, to be used to compensate property owners confiscated by the island government.
“Although no definitive agreement has been reached, the concept that the victims of Castro's tyranny may perceive some benefit from U.S.-Cuba transactions deserves to be considered. During the previous administration everything was granted to the dictatorship without demanding anything. Now that has to change,” the Miami-area congressman told el Nuevo Herald.
Arkansas Republican Rep. Rick Crawford told el Nuevo Herald recently that he was working on a bill that would remove restrictions on private financing of agricultural exports to the island. To get the support of Cuban-American congressmen who have firmly opposed relaxing sanctions on Cuba, the bill would include the two percent tax to compensate those who have claims certified by the U.S. government in relation to properties confiscated by the Cuban government From 1959.
But negotiations “have been difficult,” said a member of Crawford’s staff. In July Florida Republican Rep. Mario Díaz-Balart called for a solution that would “meet the needs of farmers but... does not support the Castro regime, its military or intelligence services.”
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Crawford’s office is satisfied with a bill they ensure meets these requirements. “While we have not yet seen the public support of our negotiating partners, we see no reason why they would oppose the idea that they proposed and that benefits their voters in such a significant way,” a Crawford staffer said.
Diaz-Balart's office reiterated that it had not yet reached an agreement to support the bill.
Curbelo also succeeded in introducing into the draft of the bill his proposal to eliminate the automatic access of Cuban nationals to the benefits offered by the refugee program. The measure would only affect Cubans who arrived in the United States after the bill became law.
A “creative” idea
The idea of the two percent tax is “creative” but cannot be the only solution to resolve the historic dispute over the confiscation of American property in Cuba, experts say.
“It is a politically creative, financially plausible measure and may possibly be a first step toward a comprehensive settlement of compensation to those who hold certified claims” by the U.S. government, said Richard Feinberg, a former assistant to President Bill Clinton and author of a Brookings Institution study on Cuban claims published in 2015.
Claims lawyer Jason Poblete believes the proposal “is a good development” but “not enough.”
“President Trump's administration must come up with a comprehensive proposal and Cuba must be willing to negotiate but it has been stalling the process for years,” he said.
Cuba owes about $8 billion for confiscations and expropriations to U.S. citizens, including interest, and if the only payment solution was this two percent tax, the resolution could take centuries, according to estimates by John Kavulich, president of the U.S.-Cuba Trade and Economic Council.
According to figures compiled by Kavulich, U.S. sales of agricultural products to Cuba were just over $230 million in 2016. With that amount and with a tax rate of two percent, the payment of the principal alone, about $2 billion, would take almost 400 years.
“For anyone arguing for a respect for law, international or domestic, taking from one to pay another for a third's actions is unjust,” he added.
But even though the two percent rate would be paid by U.S. companies, “corporations usually pass the cost of taxes on products, so it's reasonable to think that part of this fee will be paid by Cuba,” Feinberg said.
According to Crawford’s office, several farmers associations have already shown support for the bill, and while the two percent rate is “not ideal” and “not a definitive solution,” it is a first step in paying claims. The bill proposes to eliminate the tax if the U.S. and Cuban governments reach an agreement on compensation for expropriations.
Feinberg and Poblete agree that the two-percent tax could be extended to other exports to Cuba, so that the amount collected could be higher.
Feinberg, author of the book “Open for Business: Building the New Cuba Economy,” believes that under normal conditions trade with the U.S. could account for 50 percent of the Cuban market, a figure similar to that of U.S. trade with the Caribbean. Under these circumstances, two percent of sales could reach $200 million in 10 years that could help pay for about 5,000 of the nearly 6,000 certified claims — those that don’t involve large companies.
The $200 million could cover the lion’s share of the small private claims. “Any proposal of this kind should be seen as a long-term solution,” he said. “The rest of the claims of the companies should be negotiated with the Cuban government.”
Follow Nora Gámez Torres on Twitter: @ngameztorres